Your Down Payment

Many buyers qualify for a mortgage loan, but they can't afford a large down payment. We have a few ideas

Reduce expenses and save. Be on the look-out for ways to reduce your monthly expenditures to save toward a down payment. Also, you can look into bank programs through which a portion of your take-home pay is automatically transferred into savings every pay period. You could look into some big expenses in your budget that you can give up, or reduce, at least temporarily. For example, you may decide to move into less expensive housing, or skip a family vacation.

Sell items you don't really need and get a second job. Perhaps you can get a second job and save your earnings. You can also get serious about the possessions you really need and the things you could be able to put up for sale. A closetful of small things can add up to a fair amount at a garage or tag sale. Also, you can think about selling any investments you hold.

Borrow from retirement funds. Explore the details for your individual plan. It is possible to pull out money from a 401(k) plan for you down payment or get a withdrawal from an IRA. Be sure you understand the tax consequences, your obligation for repaying funds, and penalties for withdrawing early.

Ask for help from members of your family. Many buyers somtimes receive down payment help from gracious parents and other family members who may be prepared to help get them in their first home. Your family members may be pleased to help you reach the milestone of having your first home.

Contact housing finance agencies. Special loan programs are offered to buyers in specific situations, like low income purchasers or homebuyers looking to remodel houses in a certain part of town, among others. Working with this type of agency, you can receive an interest rate that is below market, down payment help and other benefits. Housing finance agencies can help eligible homebuyers with a reduced interest rate, get you your down payment, and provide other benefits. The main mission of not-for-profit housing finance agencies is to boost residential ownership in targeted parts of the city.

Research no-down and low-down mortgages.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in assisting low to moderate-income individuals get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time homebuyers and others who might not be eligible for a traditional mortgage by themselves, by offering mortgage insurance to lenders. Interest rates with an FHA loan are usually the market interest rate, but the down payment with an FHA mortgage are lower than those of conventional loans. The required down payment can go as low as three percent and the closing costs could be packaged in the mortgage loan.

  • VA mortgage loans

    Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This specialized loan does not require a down payment, has reduced closing costs, and provides the advantage of a competitive rate of interest. Although the VA does not actually provide the mortgage loans, it does certify eligibility to apply for a VA mortgage.

  • Piggy-back loans

    You can finance your down payment using a second mortgage that closes along with the first. Often the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. The borrower covers the remaining 10%, instead of come up with the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to lend you some of his home equity to help you with your down payment money. You would borrow the majority of the purchase price from a traditional lender and finance the remainder with the seller. Typically, this type of second mortgage will have higher interest.

The feeling of accomplishment will be the same, no matter which approach you use to put together your down payment. Your brand new home will be your reward!

Want to discuss down payments? Call us: 407-834-3377.

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